Tenants evicted as buy-to-let crunch hits

A growing number of tenants face losing their homes, as landlords find it increasingly difficult to meet mortgage payments.

Rescued: Natasha palmer and Alan Rennard narrowly avoided eviction when their landlord's mortgage lender appointed a reciever of rent

Buy-to-let properties are three times more likely to run into trouble than normal residential homes.

In the first three months of this year, buy-to-let landlords lost 4,100 properties - 1,700 were repossessed and 2,400 were handed to 'receivers of rent' to run.

When landlords are squeezed, the tenants are usually unaware there is a problem. Often, it's not until the bailiffs come calling that they discover the property is about to be repossessed.

The Government is looking to introduce legislation to protect tenants in buy-to-let properties. But there is already a law to help them if they are still within the terms of their tenancy and paying the rent.

Under the Law of Property Act 1925, the lender can appoint a receiver of rents to take over from the borrower. Receivers, who are typically chartered surveyors or insolvency practitioners, are independent of the bank and the borrower.

It is up to the lender whether to appoint a receiver or take possession of the property. But Denise Ford, chairman of the Association of Property and Fixed Charge Receivers, says: 'Sometimes lenders will go for a possession order rather than appoint a receiver.

'I've heard of courts granting possession orders and evicting tenants mid-way through their tenancy. That's not legal, provided the tenants are paying their rent and abiding by the terms of their tenancy. They should go to the court hearing and object.

'The problem is some banks and even some courts aren't aware of receiverships. We stand in the shoes of the borrower and take on all rights and liabilities, and the tenant retains all their rights.'

However, in cases where the lender was not aware the home was let out, the situation is less clear. Elizabeth Brogan, of the National Landlords' Association, says: 'In these cases, the tenancy agreement is not usually binding on the lender.

'The lender will treat it as fraud and be less inclined to go down the receivership route. With a proper buy-to-let loan, the mortgage company is less inclined to get possession in the current market. It's better to keep the tenant so there is some money coming in, especially if it is covering the interest on the loan.'

Landlords can insure against trouble with tenants and even cover loss of rent - typically for 20% of the building sum insured - for as little as £118 a year, according to Moneysupermarket.com.

Halfway through their tenancy, Natasha Palmer, 26, and Alan Rennard, 25,) realised the landlord of their one-bedroom flat in Colchester was in difficulty. The lender, Mortgage Express, appointed a receiver of rents to take over.

Natasha, a project co-ordinator, says: 'We just carried on paying the rent to the receiver. The problem came at the end when we moved out. No one knew where our deposit of £550 was. The agents had passed it to the landlord who should have put it into a tenancy deposit scheme for safe keeping. 'We desperately needed the money for the £1,000 deposit on our new flat. It was really tricky.' They moved out in April and still haven't received their £550.

Stephen Molloy, of receiver Walker Singleton chartered surveyors, says: 'We're still trying to track it down. Many landlords just run off with it. Irrespective of whether we manage to get it back, we're liable for it, so they'll get it back.'